A blog where I express my opinions on smoking issues, including smokers rights issues.

ALL COMMENTS ARE MODERATED ON HERE.

Sunday, March 8, 2009

Cig tax hike will enable bootleggers

I dunno how Florida can raise funds if they get their wish of "reducing smoking." When you reduce smoking, where are the funds gonna come from? Maybe from people who eat fast food?

That goal doesn't make sense to me. But the idea of a van being able to carry 100,000 bucks worth of cigs from SC to Florida....that deserves a whistle.

I guess one way to stop Floridans from buying contrabrand cigs is by putting more smokers behind bars for buying illegal packs.

When antis called smokers criminals, I guess someone who buys contraband cigs IS a criminal. (Yeah right!) A person doesn't deserve to be behind bars for buying a pack of legal cigs in the streets though.

Actually, a van carrying $100k worth of cigs sounds a lot like the way alcohol used to be transported during the first Prohibition.

Convenience store operators and wholesale distributors said Friday that arguments that a cigarette tax increase would reduce smoking were full of hot air, claiming instead that the proposed $1 extra levy on smokes would drive price-conscience consumers to buy from bootleggers.

To make their point, the Florida Petroleum Marketers and Convenience Store Association and the Florida Wholesale Distributors Association drove three heavy duty vehicles - a 18 wheeler, a mover's truck and a cargo van – to the Capitol courtyard. They said the three trucks could easily be stuffed with contraband cigarettes if lawmakers proceed with the push to increase the tax this year.

The state cigarette tax is currently 33.9 cents per pack of common-sized cigarettes, though President Barack Obama has already signed a 62-cent increase in the federal tobacco tax.

But with the state facing a deficit that could be as high as $6 billion, backers project that raising the cigarette tax by $1 would bring in just more than $1 billion per year in revenue.

Buoyed by a 2008 study completed by the Michigan-based Mackinac Center for Public Policy that tracked cigarette smuggling in the United States, the organizations said cheaper cigarette taxes in Georgia, Alabama and South Carolina could create a million-dollar black market for Florida smokers.

In South Carolina, the cigarette tax is only 7 cents, the lowest in the nation. Georgia has a 37-cent tax and Alabama a 43-cent tax. The organizations said the cargo van alone, the smallest vehicle on display at the Capitol Friday, could bring $100,000 worth of cigarettes to from South Carolina to Florida. They say a semi-trailer could hold $2.5 million worth of contraband cigarettes.

"The goal. as stated by the Legislature, is to reduce smoking and increase funds for the state of Florida," said Jim Smith, president of the Petroleum Marketers and Convenience Store Association. "We find it difficult to understand how you can regulate personal decisions through someone's wallets, but more importantly, we think that people need to understand the unintended consequences of this legislative effort."

Smith said cigarette tax opponents can't quarrel with supporters' argument that increasing the cigarette tax would curtail smoking some, though he said a larger chunk of the decrease would be people who simply stopped buying their cigarettes legally.

"There's no doubt some are going to quit, you can't argue that point," Smith said. "However, the vast majority are going to seek other avenues for their purchasing habits, whether its driving across the border to Georgia or Alabama or sitting in your living room and clicking the Internet at one of 500 sites where you can buy cigarettes tax free, or perhaps buying contraband cigarettes, which would be the biggest loss for the Florida economy. We're taking dollars out of the state."

Smith pointed out that cigarette revenue helps fund the Lawton Chiles Endowment, which lawmakers recently swept $700 million from to balance last year's budget after state tax collections dipped drastically. Cigarette makers pay into the Lawton Chiles Fund as a condition of a settlement of a lawsuit with the state. The money goes for health and children's programs.

Smith also said that raising the cigarette tax would hurt convenience stores, which rely heavy on tobacco products for viability. Smith said 24 percent of convenience store operators' profits come from tobacco products.

David Shepp, executive director of the Florida Wholesale Distributors Association, said cigarette sales are responsible for 10,000 retail jobs in the state of Florida, which has an unemployment rate of 8.6 percent. Shepp said a $1 per pack increase would cost 2,400 Floridians their jobs.

"Businesses across the state are hurting now," Shepp said. "The idea that you would raise taxes during a recession is amazing to me. Cigarettes are the number one product that we sell. Like it or not, tobacco sales provide economic benefit to this state."

Cigarette manufacturers are making the same arguments. Their representatives have been making the rounds in Tallahassee giving the smuggling warning. In addition to arguing that people in north Florida might go other states, they also point to Indian reservations as an alternative source for cigarettes that wouldn't be subject to the higher tax.

Shepp also argued that raising the tax would increase illegal cigarette consumption.

"Government through higher taxes is creating a criminal enterprise," he said. "I know we'll never be able to stop criminals from being able to conduct their business, but we can stop the Legislature from giving them more incentives to become criminals."

But Sen. Ted Deutch, who pushed unsuccessfully for a cigarette tax increase last year and has filed legislation (SB 1840) again this year, said opponents were exaggerating their claims.

"It's one thing to grossly exaggerate the impact of cross-border sales, which common sense dictates would be as minimal here as any state given our geography and population centers," Deutch said in a statement shortly after the opponents finished their news conference. "But it's absolutely reckless to employ scare tactics on Floridians by inventing an infusion of violent crime in a desperate attempt to fight, of all things, a measure everyone knows will save lives rather than endanger them."

"Naysayers here can invoke Sopranos-like images all they want," Deutch said. "But it can't change the fact that Florida has one of the very lowest cigarette taxes to begin with. It also belittles the strong commitment of Florida's highly capable state and local law enforcement apparatus."

For his part, Shepp would not respond to questions about the negative health impact of cigarettes at the conclusion of Friday's press conference, saying only that they were a "legal product."

"(Our members) are doing their jobs, they are not telling people to smoke," Shepp said. "They are honest hardworking Floridians who are... providing products to people that they so desire."

Deutch's cigarette tax bill has been referred to the Finance and Tax, Health Regulation, Higher Education, Health and Human Services Appropriations, and the Policy & Steering Committee on Ways and Means – a difficult path in a two-month session.